* 4th-qtr earnings $2.46/shr vs est $2.36
* Expects 2015 earnings $8.50-$9.00/share vs est $8.75
* Shares rise as much as 5.4 pct to touch life high
(Adds analyst and CEO comment, updates shares and Reuters
estimate for 2015 earnings per share)
By Sweta Singh
June 18 FedEx Corp reported a
better-than-expected quarterly profit as strong shipments of
items ordered online boosted the ground business of world's No.
2 parcel delivery company.
FedEx said results in 2015 would also benefit from the
restructuring of its express business, its largest by revenue,
and it forecast full-year earnings that were better than many
analysts and investors had expected.
The company's shares rose as much as 5.4 percent to a life
high of $147.89 on the New York Stock Exchange on Wednesday.
"Forward earnings estimates across the Street (had)
declined, as many were somewhat cautious on the quarter...,"
Cowen & Co analyst Helane Becker wrote in a note to clients.
The company, like larger rival United Parcel Service Inc
, has been cutting costs to offset rising fuel prices.
The Memphis-based company is also restructuring its Express
business, which has suffered as clients choose slower but
cheaper delivery options, by revamping its routes and cutting
capacity to Asia and other international markets.
"Ground and Freight are performing well and Express remains
on track to achieve its profit improvement plan despite the fuel
headwinds we've experienced," Chief Executive Fred Smith said on
a post-earnings call.
Revenue from FedEx's ground business, which accounts for a
quarter of the company's total revenue, rose 8 percent to $3.01
billion in the fourth quarter ended May 31.
U.S. online retail sales are expected to increase to about
$300 billion in 2014 from $260 billion last year, according to
John Yozzo, managing director of FTI Consulting Inc's
Corporate Finance/Restructuring business.
FedEx said last month it would start charging for all ground
shipments by parcel size, in addition to weight, to reduce
UPS followed suit with a similar announcement on Tuesday in
the face of rising oil prices amid concerns that escalating
violence in Iraq could disrupt supplies.
The new pricing will allow the logistics giants to charge
more for items that are bulky, but not necessarily heavy, such
as diapers and large soft toys.
That will add to shipping costs for online retailers such as
Amazon.com Inc and eBay Inc.
FedEx forecast 2015 earnings of $8.50 to $9.00 per share.
Analysts expect $8.75, according to Thomson Reuters I/B/E/S.
If FedEx meets the high end of its forecast, it would beat
or be in line with the expectations of 22 out of the 29 analysts
covering the company, according to Thomson Reuters data.
Total revenue in the quarter rose 3.5 percent to $11.8
billion. Analysts had expected $11.66 billion.
The company reported earnings of $2.46 per share, well above
the average analyst estimate of $2.36 per share.
FedEx said capital expenditure would rise about 2 percent to
$4.2 billion in 2015. The increase is largely due to aircraft
deliveries to support the company's fleet modernization program
and for expansion of its ground network.
FedEx shares were up 4.9 percent at $147.19 in early
afternoon trading. UPS's shares little changed at $102.32.
(Additional reporting by Sagarika Jaisinghani; Editing by
Saumyadeb Chakrabarty and Ted Kerr)